The chart Andrew Stiles referred to Friday (from an earlier post by Veronique de Rugy) shows only the start of how counterproductive it is to increase taxes on the wealthy. As a result of lower tax rates on the top income earners, not only do they pay a much larger share of all taxes, but they pay much more taxes total — and revenue to the government has increased. This is because lowering taxes on the rich creates more rich people and richer rich people. The federal government gets much more revenue if you impose a 40 percent tax on a large number of very wealthy millionaires than if you impose a 70 percent tax on a small number of less wealthy millionaires.

Every tax has a “revenue-maximizing” point well short of 100 percent. If a tax is set higher than its “revenue-maximizing” point, overall tax revenue to the government will decrease. This is the basic theory behind the Laffer Curve, which states that when taxes are zero percent, revenue to the government is (obviously) zero, but when taxes are 100 percent, revenue to the government is also zero, because by taxing all the income of a particular group of people, you kill all economic activity in that group, so you’re left with nothing to tax. Between those two extremes is a curve whereby revenue to the government rises as you increase taxes from zero percent, but begins to fall as you approach 100 percent taxation — that’s the Laffer Curve.

Arthur Laffer and Ford Scudder explore this phenomenon at length in their brilliant series The Onslaught from the Left. In keeping with what Veronique pointed out, they write, in Part II of the series:

In the year Ronald Reagan took office (1981) the top 1% of income earners as reflected by the Adjusted Gross Income of all tax filers paid 17.58 % of all federal income taxes. Twenty-five years later, in 2005 the top 1% paid 39.8% of all income taxes, representing a greater than doubling of the share of tax payments made by this group.

But even more to the point, from 1981 to 2005 the income taxes paid by the top 1% rose from 1.59% of GDP to 2.96% of GDP. In addition to the huge rise in the percent of GDP paid in income taxes by the top 1% of income earners and the more than doubling of the share of taxes paid by this group was the huge absolute increase in real taxes (2005 dollars using the GDP price deflator [in other words, adjusting for inflation - ML]) from 1981 through 2005. In 1981 total tax payments from from the richest 1% were $98.84 billion, while in 2005 the top 1% paid $368.13 billion in taxes; that’s a 288% increase in 25 years. In rough numbers, that means that each of the richest 1% of filers in 1981 paid a little over $100,000 in 2005 dollars, while in 2005 each filer on average paid over $288,000. And remember that’s inflation-adjusted dollars.”

This astonishing statistic is explained by a simple fact. As a result of reducing taxes on the rich, the rich got much richer — so much so that they wound up paying nearly four times as much total tax (and nearly three times as much tax per rich person) as when taxes were higher.

This also reveals the truth behind the increased income inequality that liberals love to cite as their chief evidence against supply-side economics. In fact, as Laffer explains in Part I of the Onslaught from the Left series, the poor have gotten richer — just not as quickly as the rich have. “The increasingly unequal distribution of income during the era of supply-side economics has resulted from the poor increasing their income at a rate that has not kept pace with the phenomenal gains in income the rich have experienced — not from the poor getting poorer.” He goes on to show that in fact, lower taxes rates have led both to higher income among the bottom 50 percent of income earners and lower total taxes paid by that group.

Most important of all, of course, is the fact that when the rich get richer, they invest more money in the economy, thereby stimulating economic growth. Democrats generally can’t stomach the rich getting richer, even when it means everyone is better off. But you’d think they would at least propose tax policy that increases government revenue. Alas, they so want to punish the rich that they are even willing to lower government revenue in the process. — Mario Loyola is director of the Center for Tenth Amendment Studies at the Texas Public Policy Foundation, the new of the Laffer Center for Supply-Side Economics.

Partisan bickering... hilarious. The funny thing is that the potus is impotent relative to the large dollar money managers. Plus no matter who the potus is, they got there because they were put there by their puppetmaster corporations. The parties aren't even different anymore. Both sides are bought and paid for by the same people.

Let's hope liberals enjoyed the warm glow of self-righteousness they got from voting for the unqualified left-wing black guy with the name like a terrorist, because the price tag is astronomical and still rising:

New numbers posted [Monday] on the Treasury Department website show the National Debt has increased by more than $3 trillion since President Obama took office. …

The Administration has projected the National Debt will soar in Mr. Obama's fourth year in office to nearly $16.5-trillion in 2012. That's more than 100 percent of the value of the nation's economy and $5.9-trillion above what it was his first day on the job.

Not even a Harvard grad could be enough of a fool to think this can be sustained. By the time this nightmare is over, the names of Richard Cloward and Frances Fox Piven — progressives credited with inventing the strategy of imposing communism by collapsing the economy with excessive government spending — will be household names.

Meanwhile, the Marxist saboteur in the White House blames his predecessor for the debt, and uses it to justify further crippling the economy by letting taxes shoot into the stratosphere on January 1.

Turned it around? Started with a surplus & ended with the major investment banks facing imminent collapse, car companies facing bankruptcy, AIG positioned to crash the whole shebang & job losses nearing 800,000 per month, raised the debt limit seven (7) times... he turned it around all right

1. We'll actually see the MSM using tactics like this in the upcoming election coverage even though they realize how intellectually dishonest it is.

2. Somebody like Ugly **** knows exactly how they're trying to mislead people with a chart like this, but liberals have such a lust for power they really don't care what tactics they use to achieve or maintain that power. They care much more about control than they do about the welfare of their fellow countrymen

3. Hey Ugly ****, I keep forgetting...how does that chart line up with the timing of Dems gaining, then losing absolute control of Congress?

I'm not sure with all the knee jerk reactionism of this forum that you realize if we undo the Bush tax cuts they will be paying the same tax rate as they had for years. Here's a little oddity. The US had a surplus before the tax cuts. None or even close since then.

I'm not sure with all the knee jerk reactionism of this forum that you realize if we undo the Bush tax cuts they will be paying the same tax rate as they had for years. Here's a little oddity. The US had a surplus before the tax cuts. None or even close since then.

No, but ALL tax reductions result in increased revenue EVERY TIME. Didn't you know that? It's the magic super elongated Laffer curve.

Also, looking at comparative data for when tax rates were raised or lowered is somehow meaningless.